European policy makers must weigh how far to push Cyprus after lawmakers in the Mediterranean nation rejected an unprecedented levy on bank deposits, throwing into limbo a rescue package designed to keep it in the euro.
Luxembourg Finance Minister Luc Frieden called for the 17 euro-area finance ministers to reconvene “as soon as possible” to cobble together a new package. The European Central Bank, whose Governing Council meets today in Frankfurt, will also have to decide whether to give Cyprus more time or consider cutting off liquidity to the country’s banks.
“This is not a good result -- neither for Cyprus, nor for the euro zone, and we have to look together for alternatives to the negotiated package,” Frieden said yesterday in a phone interview from Frankfurt. He called the vote “very sad news,” though said the decision by its parliament must be respected.
Cyprus’s rejection came after days of recrimination sparked by European plans to force depositors in the country to shoulder part of the bailout with their savings. Cypriot President Nicos Anastasiades returned from marathon talks on March 16 saying the alternative would be the “indescribable misery” of the ECB cutting off funding to one of its banks.
“What matters now is to undertake all necessary measures to ensure the stability of the euro zone,” Frieden said.
Read all : http://www.bloomberg.com/news/2013-03-19/europe-weighs-cyprus-s-fate-after-lawmakers-reject-bailout-deal.html
